In the Beginning
For the past few months, I've been using the social trading platform eToro. I thought I would put together this page to explain a bit about my strategy and what etoro is. I first heard about eToro when they launched quite a few years ago. Back then their product was very different and basically was Forex wrapped in a game like graphics interface. I.e. trading forex felt a bit like playing a game.
Since then, they've moved towards becoming a social trading platform. I guess the best way to describe it is the "Facebook of Forex". And so I decided to give it a go.
My Forex Experience
I can comfortably state I have no experience in trading forex. I've done some reading on the subject and now know what a pip, spread, order etc. is. But, I wouldn't trust myself to actually invest money in Forex.
Enter eToro, where you're able to copy the traders who actually know what they are doing. The process is relatively simple, just look for traders on the network who have a good record and then click a "copy" button. From now on, all their trades will be be copied by your account.
That's My Chart
As you can see, although there have been a couple of dips, I've actually done ok. At the moment I'm up around 30% over the last 6 months. Thats quite a decent return!
Both the dips on the chart were the result of my noob investing experience. Instead of copy-trading I went all maverick and invested in Apple before it decided to take a dive. I now leave it to the gurus
My Strategy
Be Picky When Choosing Who to Copy
It's tempting to follow the traders with 400% returns. But a quick bit of research (and common sense) will tell you that these traders are using high risk strategies. Forex is already high risk, so don't make it even worse. Follow traders who have a 10-20% return and have been doing so for the past year
eToro has great filtering tools to find the exact type of trader you want to follow. Look for someone with a majority of low-medium risk traders, and a low weekly drawdown
Diversify
Spread your investment over numerous traders. All traders have bad weeks. By copying as many traders as your budget will allow, you're able to mitigate the risk of having your entire investment wiped out by a single trade.
eToro Stocks are a Good Way to Diversify
I used to stay away from following traders who invested in stocks on etoro, but that has changed since etoro introcued real time stock trading. I've found that traders who invest in both forex and stocks provide more reliable returns over the long term
Choose Frequent Traders to Copy
You don't want to be stuck copying a trader who only logs in every couple of weeks. Look for gurus who make frequent trades.
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